The Jindal administration’s cancellation of a $185 million-plus Medicaid claims processing contract is “a travesty” that the firm will fight, the president of CNSI, Adnan Ahmed, said Thursday.
“We are analyzing what harm it has done. But we cannot predict what future harm this episode will do,” Ahmed said. “We are going through this process with our legal team. It’s one step at a time.”
Ahmed talked about the Jindal administration canceling the contract along with the issues raised before and after the contract’s award in 2011 when the company’s president firm visited CNSI’s now mostly vacant office in Baton Rouge. Client Network Services Inc., called CNSI, is based in Gaithersburg, Md. in suburban Washington, D.C.
About 100 employees were working in the Baton Rouge area three weeks ago when Commissioner of Administration Kristy Nichols abruptly announced the contract termination. The move came after a news report that a federal grand jury had subpoenaed state records related to the award of the lucrative Medicaid Management Information System contract.
Competitors of CNSI complained the company “lowballed” its price.
In addition, Bruce Greenstein, then the state health secretary, had worked for CSNI as a vice president for health care in 2005 and 2006. Greenstein, who previously said he removed himself from contract dealings, resigned after the federal probe came to light last month.
Larry Iversen, who is the senior account executive for CNSI in Louisiana, said Thursday that the company has not been contacted by federal investigators.
CNSI started work in February 2012 on a conversion from current contractor Molina Medicaid Solutions, which had been targeted for completion in late 2014. Molina as well as ACS State Healthcare LLC, and HP Enterprise Services LLC competed for the contract.
Ahmed and Iversen said they still have not been given a specific reason for the contract cancellation.
“We want to find out. We want to seek the truth,” said Ahmed. “Perhaps it was a hasty decision based on insufficient information.
“There’s a lot of speculation,” Ahmed added.
A letter notifying CNSI of its firing cites a Louisiana law that states: “if the person awarded the contract has acted fraudulently or in bad faith, the contract shall be declared null and void.”
State Department of Health and Hospitals officials agreed to meet with CNSI executives, but Ahmed said DHH has not responded to suggested dates for a meeting.
Ahmed said CNSI started looking at the potential for doing business in Louisiana in 2009 because the state was preparing to seek a new Medicaid claims processor.
He said there were conversations with Louisiana health officials Jerry Phillips and Tony Keck before the solicitation for proposals was made and before Greenstein became DHH secretary in fall 2010. Then, Ahmed said he met with Greenstein only after Greenstein became health chief.
“There was no blackout period, otherwise those people would have declined to have those meetings,” Ahmed said. There were no other contacts, he said.
Greenstein said previously that he met with Ahmed on one occasion prior to the solicitations, but that he had no involvement in development of the Medicaid Management Information System contract solicitation. However, Greenstein has said he did back a change that allowed CNSI to compete.
The change allowed companies, such as CNSI, that had no history of being a fiscal intermediary to compete.
Ahmed said other states allow firms to subcontract that work “because they want competition.” He said if the change had not been made, CNSI would still have competed, but Noridian — a subcontractor — would have become the prime contractor and CNSI the subcontractor.
Ahmed said the firm could offer a much lower price than competitors because it was “bringing these efficiencies from other states,” in which it works, such as Michigan and Washington.
Michigan, for instance, had $148 million in operational efficiencies within the first 18 months, he said.
Ahmed said CNSI agreed to the “fixed price,” even if the assumptions it made were wrong.
Iverson addressed the circumstances around a contract amendment that was approved involving federally mandated changes in billing codes and another aimed at fraud prevention and detection that was rejected by the Jindal administration.
Originally, the current contractor, Molina, was going to complete the billing code update but then federal officials pushed the implementation date into October 2014, Iverson said. State health officials believed it would make more sense to let CNSI handle the changes. “This was a new scope of work,” Iversen said.
The proposed $40 million contract expansion to cover Medicaid anti-fraud efforts was not in the original solicitation for proposals.
Iversen said the original contract anti-fraud provisions all related to post-payment checks, where funds erroneously paid would have to be recouped. “What DHH wanted to do was to bring a lot more data in that analysis, a lot more things on the front-end before the claim is paid,” Iversen said.
Iversen said DHH first approached the current contractor, Molina, but the firm opted not to take on the work. “Then DHH came to us,” he said.
The state Division of Administration decided the work should be put out for competitive proposals.